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Markets for forest goods and services

Markets for forest goods and services. Discuss the basic elements for creating markets for forest goods and services Discuss selected market based financing mechanisms for forestry. Objective of this session. Elements of markets. Ask yourselves: What is a market?.

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Markets for forest goods and services

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  1. Markets for forest goods and services

  2. Discuss the basic elements for creating markets for forest goods and services Discuss selected market based financing mechanisms for forestry Objective of this session

  3. Elements of markets Ask yourselves: What is a market?

  4. “Demand” as the basic concept Product or service Buyers Sellers The “Willingness To Pay” (WTP) Without existing or latent demand there can be no market Elements of markets

  5. Values: Financial versus economic values Positive and negative values associated with the same good Stock values and flow values Current and future values Value in exchange and value in use Elements of markets

  6. Products Services Site specific and user specific or More general and global demand Elements of markets

  7. Costs to establish markets for goods and services from natural resources can be high Initial costs Operational costs Creating markets

  8. Initial costs Technical costs (on how to transform the product into payments) Organisational costs (elaborate network, of supporting organisations, new roles) Legal costs (definition of property rights for instance) Creating markets

  9. Operational costs monitoring performance, enforcing rules and renegotiations of contracts Creating markets

  10. What are they? Key features Flexibility to those who know best Choice Innovative (market-based) Financing Mechanisms

  11. Why? New source of financing They can potentially benefit the poor They are a cost-effective way to achieve environmental goals Innovative (market-based) Financing Mechanisms

  12. Conventional markets for timber and NTFPs Payment for Environmental Services (PES) Environmental performance bonds Conservation concessions Conservation easements / contracts Service concessions Concession bidding Carbon offset trading (a PES) Certification Market-based Financing Mechanisms: Examples (1)

  13. Bio-prospecting contracts Biodiversity business shares Biodiversity credits/offsets Community – private sector partnerships Joint private sector and public/private partnerships “Green” equity capital and associated investment instruments Tradable development rights User fees Market-based Financing MechanismsExamples (2)

  14. PES is often innovative but not a panacea PES however can be important for diversifying financing sources PES can catalyze efforts to improved practices PES can contribute to sector development and pro poor policies Markets for services: Payment for Environmental Services (PES)

  15. Markets for ecological services are multistakeholders affairs Commercial enterprises Governments (local, regional, national) NGO’s (local and international) Donors Community groups Individual landholders Stakeholders involvement

  16. Stakeholders play different roles: Buyers and sellers Primary and intermediary Roles of governments Stakeholders involvement

  17. Good Governance is critical for emerging markets: Effective and appropriate national laws/policies Transparent decision-making Functioning institutions Adequate market infrastructure Well conceived fiscal regime Stable macro-economic horizon (investors) Governments and Institutions

  18. Key role of Governments to assist in market development for forest services Raising awareness Reducing transaction costs and trading risks Providing secure property rights Introducing strict environmental standards Enabling Institutional context

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